Zenith Group has said that the current Nigerian economy is adversely impacting the insurance industry.
Jim Ovia, the Chairman of the group, represented by the Managing Director/Chief Executive Officer of Zenith General Insurance Company Ltd. Kehinde Borisade said this while delivering a paper titled, 'Improving Insurance Penetration in Nigeria'.
The paper was delivered at the Nigerian Council of Registered Insurance Brokers (NCRIB) 60th Anniversary Grand Ball and Night of Honours in Lagos, sponsored by Zenith Insurance.
According to him, the country is facing serious economic challenges with an estimated 2023 budget deficit of around five per cent of an estimated Gross Domestic Product (GDP) of $514 billion as of September.
He said the country’s inflation rate of 20.8 per cent was significantly higher than its top African peers.
Ovia noted that following the trend, the insurance industry had to cope with increased costs, inflation in claims payment and failure to realise profit.
He expressed displeasure that the insurance industry accounts for only N2.27 billion out of the $514 billion GDP the country generates.
The chairman stated that Nigeria has the lowest insurance penetration rate of 0.3 per cent, among other African countries with GDP sizes of over $100 billion.
“This compares poorly to the rate of around 40 to 54 per cent in the Europe and USA,” he said.
He also identified reasons for low insurance penetration in Nigeria and Africa to include financial illiteracy and affordability for low-income earners.
He identified other factors including cumbersome processes, due to inadequate robust and sophisticated technology, gaps in the industry value chain and distrust of insurance companies.
To improve insurance penetration, Ovia suggested that the industry should adopt the ‘SUAVE principle.
The SUAVE principle means making insurance products, claims and policy wordings Simple, Understood, Accessible, Value adding and Efficient for all stakeholders.
He also advised brokers not to capitalise on their monopolistic power in controlling the insurance market.
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